Tower City aims to construct a new bypass between two main routes that will reduce commuter travel time. The route will cost $15 million and will save 17,500 people $100 per year in petrol costs. The path will be paved. Every year, at a cost of $7,500, the surface must be refinished. The road will be in use for the next 20 years. Determine if Tower City should construct the road. Money has an interest rate of 8%(e interest rate). a. The Net Present Worth of this project $ Blank 1 b. The IRR of this project = Blank 2% c. The ERR of this project = Blank 3% d. Should the city build the bypass road? (type only Yes or No) = Blank 4 e. The simple payback period is on Year Blank 5 1. The discounted payback period is on Year Blank 6

Tower City aims to construct a new bypass between two main routes that will reduce commuter travel time. The route will cost $15 million and will save 17,500 people $100 per year in petrol costs. The path will be paved. Every year, at a cost of $7,500, the surface must be refinished. The road will be in use for the next 20 years. Determine if Tower City should construct the road. Money has an interest rate of 8%(e interest rate). a. The Net Present Worth of this project $ Blank 1 b. The IRR of this project = Blank 2% c. The ERR of this project = Blank 3% d. Should the city build the bypass road? (type only Yes or No) = Blank 4 e. The simple payback period is on Year Blank 5 1. The discounted payback period is on Year Blank 6

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter10: Project Cash Flows And Risk

Section: Chapter Questions

Problem 11PROB

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Dunkin City wants to build a new bypass between two major roads that will cut travel time for commuters. The road will cost $16,000,000 and save 17,500 people $100/year on gas. The road will need to be resurfaced every year at a cost of $10,000. The road is to be used for 20 years. Use B/C analysis to determine whether Dunkin City should build the road. The cost of money is 8%.
Tower City aims to construct a new bypass between two main routes that will reduce commuter travel time. The route will cost $15 million and will save 17,500 people $100 per year in petrol costs. The path will be paved. Every year, at a cost of $7,500, the surface must be refinished. The road will be in use for the next 20 years. Determine if Tower City should construct the road. Money has an interest rate of 8%(ε = interest rate) Note: Show final answer in two decimal places. and complete solution a. The Net Present Worth of this project = $ Blank 1 b. The IRR of this project = Blank 2% c. The ERR of this project = Blank 3% d. Should the city build the bypass road? (type only Yes or No) = Blank 4
Tower City aims to construct a new bypass between two main routes that will reduce commuter travel time. The route will cost $15 million and will save 17,500 people $100 per year in petrol costs. The path will be paved. Every year, at a cost of $7,500, the surface must be refinished. The road will be in use for the next 20 years. Determine if Tower City should construct the road. Money has an interest rate of 8%(ε = interest rate) Note: Show final answer in two decimal places and show complete solution e. The simple payback period is on Year Blank 5 f. The discounted payback period is on Year Blank 6
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